Russian markets on rough seas of politics

The outcome of Russian politics is having a profound effect on the country’s economic scene, with the stock market suffering after last week’s protests.

Stock markets are an indicator of general investor sentiment, and their movement was clear proof of how big an impact political issues had in Russia last week.

Even markets in Europe, a place that’s currently suffering , were more positive than in Russia, said Igor Nikolaev, director of strategic analysis at FBK (PKF) audit and consulting company.

“Last week Russian markets fell the most, by almost 7-9% in the red, while most of other overseas markets lost about 1-2%,” he said.

Political stability has often been one of the factors attracting foreign investors to Russia. The ongoing global financial turmoil has pushed foreign investors to turn their faces away from Russia. The country could find itself short of about $80 – $85 billion in 2011. Analysts see the trend continuing over the next couple of years.

Russia’s economy obviously needs money, more investment could help to fight this doom and gloom, experts agreed, with Andrey Yakovlev from the High School of Economics saying stable money injections “can create the economic growth of about 6-7% even during times of uncertainty.”

And talking to Business RT Aleksey Moiseev, head of macroeconomic analysis at VTB, said more transparent and investor friendly environment could make a major turnaround.

“The situation will change, when the investment climate improves,” he said.